Currency and Pearson Education Essay

Submitted By 昊-杨
Words: 436
Pages: 2

Mini-Case 5
Venezuelan
Bolivar Black
Market

It’s not clear whether Mr. Chávez understands what a massive hit Venezuelans take when savings and earnings in dollar terms are cut in half in just three years. Perhaps the political-science student believes that more devalued bolivars makes everyone richer.
But one unavoidable conclusion is that he recognized the devaluation as a way to pay for his
Bolivarian “missions,” government projects that might restore his popularity long enough to allow him to survive the recall, or survive an audacious decision to squelch it.
-- “Money Fun in the Venezuela of Hugo Chávez,” The Wall
Street Journal , February 13, 2004, p. A13.

MC5-2

© 2015 Pearson Education, Inc. All rights reserved.

Venezuelan Bolivar
"Rumor has it that during the year and a half that Venezuelan President Hugo Chávez spent in jail for his role in a 1992 coup attempt against the government, he was a voracious reader. Too bad his prison syllabus seems to have been so skimpy on economics and so heavy on Machiavelli."
“Money Fun in the Venezuela of Hugo Chávez,”
The Economist, February 13, 2004.

MC5-3

© 2015 Pearson Education, Inc. All rights reserved.

The Venezuelan Bolivar Black
Market
• Santiago’s once-thriving pharmaceutical distribution business in
Caracas, Venezuela, has hit hard times
– Since capital controls were implemented in February of 2003, dollars had been hard to come by
– He has been forced to pursue various methods – methods that were more expensive and not always legal – to obtain dollars, causing his margins to decrease by 50%
– The Venezuelan currency, the bolivar (Bs), had been recently repeatedly devalued
– This had instantly squeezed his margins as his costs…